Paying Off Credit Card Debt Means Smarter Spending

It seems that, during the past months, American consumers have been getting smarter with their spending, keeping away from credit card debt and building up their savings. During the holidays, consumer spending on credit cards went down as reports from groups such as Consumer Reports and the National Retail Federation indicate.

Such a trend may mean that a lesser number of consumers will be facing difficult credit card debt this year. However, it is certain that a lot of consumers are still going to be wrestling with credit card debt this year, especially because consumers just got out of the holiday season, a time of increased consumer spending.

For the new year, analysts insist that the key to financial survival lies in smarter spending decisions.

When credit card holders begin to see their credit card bills pile up, something consumers who overspent during the holidays are probably facing, the important thing to keep in mind is that they need to look at all their spending and debt. This will help them figure out the best way to pay off those debts. Card holders should look not only at their credit card debts but also with their other debts such as mortgages and car payments. By determining where debt payments ought to go first, they can then determine how much they can afford to set aside for their credit card debt payments.

For card holders with multiple credit cards, the bulk of their credit card payment should go to paying off the debt with the highest interest rate. For the other credit cards, they should try to at least keep up with the minimum monthly payments. It is also important for consumers to pay off more of their debt as much as they can. Keeping up only with the minimum monthly payment lengthens the amount of time needed to pay off the debt which translates to more interest fees to pay.

When paying off credit card debt, it is essential that card holders avoid using their credit cards as much as they can. They ought to focus more on paying with cash for their purchases. As a matter of fact, given the current credit industry climate, this should be what all card holders should do, even those without debt problems.

To be able to pay more of their credit card debt, consumers must review their expenses. They need to figure out what their fixed expenses and their flexible expenses. Fixed expenses are necessities such as rent, utility payments and grocery expenses. Flexible expenses are cable TV, movies and other entertainment expenses. By cutting off their flexible expenses as much as they can, consumers can increase their credit card debt payments which will end their debts that much sooner.